Tag Archives: political economy

Another Reason…

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…to stop doing business with the People’s Republic of China—especially, stopping exporting American natural gas to that nation.

The Biden administration has been busily selling American, that is, domestically produced, liquified natural gas to the People’s Republic of China. LNG his administration sells there, mind you, isn’t LNG he can sell to the gas-strapped nations of Europe and Asia.

Selling energy to an enemy nation is bad enough, and it’s worse when those sales come in preference to sales of the same energy to our friends and allies.

The worst, though, is selling our energy to that enemy nation—the PRC—only to have that nation resell our energy to our friends and allies—the gas-strapped nations of Europe and Asia—at a steep profit for itself.

[PRC] companies that signed long-term contracts to buy US liquefied natural gas are selling the excess and making hundreds of millions of dollars per cargo. Buyers include Europe, Japan and South Korea.

For instance:

[The PRC]’s ENN Natural Gas Co is expected to profit from this trade when it sends the LNG tanker Diamond Gas Victoria to pick up a cargo of gas from Cheniere Energy Inc’s plant at Sabine Pass, LA, on the Gulf Coast on October 18, according to three industry sources.
Instead of dispatching the tanker to [the PRC]’s east coast, the vessel is scheduled to deliver LNG to Europe, they said. ENN is estimated to make a profit of between $110 million and $130 million on this one cargo shipment, analysts said, basing their calculations on market pricing data.

It’s true enough that the PRC’s resales to Europe and Asia are a drop in the ocean compared to those nations’ natural gas needs, but these are sales, and profits, that would be better done as a result of our directly selling our liquified natural gas to Europe and Asia, and at a lower cost, if only from cutting out the middle man. And from cutting out an enemy nation.

A Simple Enough Solution

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And straightforward, too.

Nike thinks it has supply chain and marketing problems with its shoe manufacturing.

Nike Inc’s quarterly results highlight how some US brands have too much inventory at home and in markets like China, where the companies have placed big financial bets.
The sneaker giant on Thursday said revenue from China in the August quarter fell 16% to $1.65 billion, citing Covid-19 lockdowns in different cities hurting store traffic.

The People’s Republic of China represented some 13% of sales and 29% of earnings for Nike in its quarter ending last August.

Nike offered a number of excuses for its problems, including the PRC’s Wuhan Virus-related lockdowns, a heat wave in the PRC that the PRC claimed affected energy production, and inflation.

These are, though, just excuses. Nike’s problem—and it’s a political and a moral one, also—is that it does business inside the PRC.

These problems wouldn’t exist if the company moved is manufacturing facilities out of the PRC. Neither Vietnam nor Japan nor Australia have lockdown or heat wave/energy problems affecting manufactury (Australia has made significant progress since its wind storm shut down its wind-power energy production in a western state a couple years ago).

Neither would Nike have a PRC-related inflation related problem with its PRC inventory or sales if it didn’t do business in the PRC.

Nike wouldn’t have any sort of supply chain problem, or delivery problem, were it to make its products in the US.

Nike would solve its political and moral problems (did company managers have the grace to recognize that these problems are real) if it had no business dealings of any sort with the PRC so long as that nation continues its genocidal behavior vis-à-vis the Uighurs.

A Good Move

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Finally.

The Biden administration has granted a waiver to the Jones Act so American shippers can ship diesel fuel directly from American refiners to Puerto Rico, which desperately needs the fuel—still—after Fiona ran over it.

Homeland Security Secretary Alejandro Mayorkas said in a statement that the administration granted the “temporary and targeted” waiver to “ensure that the people of Puerto Rico have sufficient diesel to run generators needed for electricity and the functioning critical facilities as they recover from Hurricane Fiona.”

Finally, because the Biden administration should have granted this waiver preemptively a month ago, if not sooner: they knew the hurricane was going to do serious damage to the territory—which still hasn’t fully recovered from the prior hurricane—whether or not this hurricane ran over the island. Worse, this administration had been sitting on a request for the waiver since 20 September, when BP asked for it for just this reason.

It would be even better if President Joe Biden (D) granted a broader and longer-lasting waiver so New England States could get the natural gas, oil, diesel fuel, gasoline, and so on that they so desperately need and for which they must pay especially exorbitant prices to foreign entities to get.

New England also could get these energies overland, but for the Progressive-Democratic regimes running New York. Those regimes have blocked development of a natural gas pipeline from Pennsylvania into New England that must transit New York, and they have block development of that part of the Marcellus Formation that lies under New York—which obstruction inflates energy costs not only for New England’s citizens, but for all the rest of us citizens, as well.

An Energy Crisis

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New England may face one this winter. Too many who should know better are laying this prospect off to Russia’s invasion of Ukraine.

There are more proximate origins of the risk. One is the Biden administration’s naked war on our nation’s overall domestic energy production industry, including canceling pipeline projects in progress and denying permits for other pipelines—including one from Canada down into New England—canceling drilling leases and slow-walking permits (or outright denying them) to drill on other leases, withdrawing Federal lands from any sort of fossil fuel exploration or development, and on and on.

But that is only backdrop, and corrections to those failures would have no immediate effect on New England’s risk.

A more immediate origin is the domestic blockade of energy to New England, which consists of two barriers. One is ex-Governor Andrew Cuomo’s (D) decision to block a natural gas pipeline from Pennsylvania to New England, a pipeline that would have transited New York, coupled with Cuomo’s decision to deny development from within New York of the Marcellus Formation, a shale formation rich in, among other things, natural gas. These decisions have been upheld, and enthusiastically so, by current New York Governor Kathy Hochul (D). New England’s energy needs be damned.

The other barrier from the blockade is the Jones Act, a century-old law that in pertinent part mandates that goods (for instance, oil and natural gas) carried from one American port (vis., a Gulf Coast refinery) to another American port (vis., Portsmouth, NH, or Portland, ME) must be via an American freighter.

These barriers already have combined to force New England to buy its natural gas from…Russia. Which is the only way the barbarian’s invasion of Ukraine enters into the problem at all.

Immediate and mid-term solutions should be obvious: waive the Jones Act restrictions on energy shipments into New England, something well within the authority of President Joe Biden (D). Given the state of American ship building capacity, this cabotage aspect of the Act should be rescinded altogether, but that would require Congress to do.

Another, more mid-term, solution would be for New York to get out of the way of exploitation of Marcellus and to allow pipeline shipments of natural gas into New England from Pennsylvania. That, though, will require replacement of the Progressive-Democratic Party-run State government with a more balanced and Conservative and Republican Party-run government.

Only an Inch

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That’s how much President Joe Biden (D) said inflation rose, after it rose more than 8% in August.

It’s about to get worse.

Earlier this month, the NEADA [National Energy Assistance Directors Association] projected that the average cost to heat a home would increase by 17.2% since last winter, rising from $1,025 to $1,202. Heating oil costs will jump an estimated 54% to $1,876, while natural gas costs may increase 24% to $709, according to the NEADA.

Nick Loris, Public Policy‘s C3 Solutions Vice President, emphasized the impact on those in the lower economic strata—”folks” Biden pretends so piously to care about:

[M]ore money dedicated to paying for heat means fewer resources are essential for human well-being[.]

And that means

…will be regressive, hurting the poor the most since they spend a higher percentage of their budget on energy costs[.]

I suppose that’s only another inch of increase in Biden’s mind, though, so it’s all good.